HomeMy Public PortalAboutResolution No. 224-05 03-08-2005 RESOLUTION NO. 224-05
• A RESOLUTION OF THE CITY OF Richland Hills ~ TEXAS, ENDORSING
CERTAIN LEGISLATIVE CHANGES TO S.B.7 SUPPORTED BY CITIES
AGGREGATION POWER PROJECT, INC.
WHEREAS, the City ofxichland xills ,Texas (City) has historically been active in
the process of regulation of electric utilities; and
WHEREAS, the City is a member of Cities Aggregation Power Project, Inc. (CAPP)
and, as such, made a decision to join with more than 78 other cities to
switch its municipal electric accounts from its incumbent provider to a
retail electric provider; and
WHEREAS, CAPP's experience with the deregulated market and contracts with several
different retial electric providers has indicated that the Texas electric retail
market has failed to develop into a truly competitive market as envisioned
by Senate Bill 7 (SB7) in part because congestion zones within the
ERCOT market have allowed certain market players to control enough
generation capacity within a given zone to exercise market power to the
detriment of customers and non-affiliated retail electric providers; and
WHEREAS, retail electric price competition has not successfully reached residential
customers in Texas communities with populations less than 40,000; and
WHEREAS, the formula established by SB7 to determine the amount to be paid to
cities for electric franchise fees is based upon information from 199$ and
fails to account for any increases to keep up with inflation, impacting
municipalities' revenue and budgets; and
WHEREAS, the Public Utility Commission of Texas is considering implementing a
nodal market design in ERCOT that would, as currently contemplated,
directly assign congestion costs in a manner that will create winners and
losers among geographic areas of the state and harm economic
development in areas receiving congestion cost surcharges; and
WHEREAS, the City endorses efforts proposed by CAPP to modify the electric
deregulation legislation to improve competition, implement the original
intent of S.B. 7 and reduce costs to the City and its residents.
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THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
• R i r h l a n rl u; i~ c ,TEXAS, THAT:
I.
The following legislative reforms endorsed by CAPP to limit market power, prevent cost
shifting between geographic areas of the state, create effective citizen aggregation and permit
annual adjustments to municipal franchise fees be supported by the City:
• Require that ERGOT function as one zone or limit the ownership and control of
generation within functional markets (ERGOT zones) and require further
Commission action to mitigate market control.
• Authorize citizen aggregation projects that will permit cities and towns with
populations less than 40,000 to aggregate the load of all of their residents that have
not specifically asked to be excluded from the aggregation project. Changing citizen
aggregation from "opt-in" to "opt-out" will enhance the opportunities for rural
residential customers to benefit from deregulation and benefit the entire state by
increasing competition.
• Tie escalation of electric franchise fee amounts to the Consumer Price Index by
permitting municipalities to annually adjust franchise fee amounts by one-half of the
annual change to the consumer price index, mirroring a provision already in law for
telecommunications franchise fees.
• • O ose an cost allocation system of nodal pricing costs that would directly assign
Pp Y
congestion costs in a manner that is detrimental to economic development. CAPP
and STAP question whether ERGOT is capable of handling the massive operational
change that creating a nodal market would require and whether the projected benefits
are worth the approximately $500 million up-front costs to implement. However, if
nodal pricing is instituted then congestion costs should be spread to the entire
ERGOT service area rather than increasing electric costs for customers in certain
regions of Texas.
II.
A copy of the resolution shall be sent to the elected lawmakers representing the City's
interests in the Texas House and Senate and to the Chairman and legal counsel of CAPP.
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PRESENTED AND PASSED on this 8 day of March , 2005, by a vote
of 4 ayes and 0 nays at a regular meeting of the City Council of the City of
• Richland Hills ,Texas. ~e~~~~Q~b
~-~~•.3 = M yor Nelda S. Stroder
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ATTEST: ~ en~r F
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C._. / 1 0 ~ 1 6 1 1~
Secretary Kim Sutter
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